Real Estate Agent Taxes

You’ve come a long way to establish your career, and the last thing you want to do is run afoul of the IRS. There are some important things you need to know about taxes so you turn in the right forms – and you claim the right deductions. Read on to learn more about taxes as a real estate agent.

As a real estate agent, you either work in an agency or you function your own business. If you choose to do the latter, you will be recognized as a only proprietorship. As a only proprietor, you are self-employed and are not classified as a corporation like a sub-S. Your classification as far as the IRS is concerned is a statutory nonemployee so long as your income for sets rendered is derived from sales of homes or appraisals of homes that will be bought or sold and not based on hours you work. You will also need to put this into a contract that states you are not an employee in order to protect yourself.

You are eligible to take several tax deductions so long as the items in question are truly only used for your business. Take for example a computer you purchased for your agency. If you use it only for work, you can take the complete amount off of your taxes next year. That can save you several hundred dollars, but, it is very important that you only use it for business. Any personal use reduces or completely nullifies the deduction.

Other office deductions you can take include your office utilities and rent, or at the minimum the portion of your utilities and rent that belong to the room in your house you use as your office. Office supplies that are consumable, meaning they are used up in less than a year, can also be deducted. This includes pens and pencils, in addition as postage.

You can also deduct travel expenses. Your driving that you do is all deductible, unless you excursion from your home to an outside office. Your commute is not deductible, but everything you do to see and show houses is, so be sure to keep track of your mileage. (It’s much easier than trying to keep all of your receipts.) The IRS publishes the permissible mileage amount each year – for 2015, it’s 57.5 cents per mile. That can really add up quickly.

Receipts you should definitely keep are from any out of town trips. Your hotel costs, airfare, and ground transportation are all deductible, plus a portion of your meals. For the 2015 year, you can deduct 50% of the cost of your meals. Things get a little tricky if you take clients out for lunch. You have to have actual business conversations either during the meal or at the minimum right before or after the meal for them to count. This applies to activities you treat your clients to in addition, like a football game.

There may be some other deductions you can take, like necessary insurance costs or depreciation. Check with your accountant on how all of that could work for you, so you can be a tax-savvy business owner.

Leave a Reply